The SNP has urged Jeremy Hunt to consider creating “mini enterprise zones” in towns across the country to help struggling hospitality businesses with their VAT bills.
Drew Hendry said the Budget gave the Chancellor “the perfect opportunity” to tackle some of the financial woes facing pubs, bars, restaurants and venues.
His call for help with VAT echoes demands from Deputy First Minister Shona Robison, multiple industry bodies and an increasing number of the Chancellor’s own Tory MP colleagues.
READ MORE: When is the Budget and what will Jeremy Hunt announce?
Mr Hendry, as the party’s Economy Spokesperson, will respond for the SNP in the Commons when Mr Hunt sets out his tax and spending plans tomorrow.
Speaking to The Herald, the Inverness, Nairn, Badenoch and Strathspey suggested the new “mini enterprise zones” could be targeted at specific areas, where particular businesses, like hospitality or tourism firms, would then pay a reduced rate of VAT or even be entirely VAT-free.
Enterprise Zones were created by George Osborne back in 2011 to assist “the parts of Britain that had missed out in the last ten years.”
The Scottish Government soon followed suit establishing Enterprise Areas. They are are now 15 sites spread across Scotland.
Commercial and industrial businesses relocating to the zones often receive incentives to set up or expand.
READ MORE: Shona Robison urges Chancellor not to cut taxes in pre-election budget
Mr Hendry has also thrown his party’s weight behind calls to bring back duty-free shopping for arrivals in the UK’s airports.
Currently, passengers flying into Britain from an international destination can only purchase duty-free products at their point of departure.
Research conducted by the Association for International Retail shows British shops have lost £1.5bn per year.
Mr Hendry said: “The tourism and hospitality sector has suffered massively since the Covid-19 pandemic. Coupled with the impact of Brexit, things have not been easy.
"The Scottish Government is doing what it can to support businesses, including removing rates for 100,000 small businesses with the small business bonus, bringing in the 'New Deal' for business, and encouraging people to support their neighbourhood enterprises with the 'Shop Local' campaign.
"However, more must be done from the UK government who continue to stick their heads in the sand and ignore the calls from the hospitality sector.
“This Spring Budget offers the Chancellor the perfect opportunity to address the key issues with VAT which, in turn, would help boost both Scotland and the UK's economy.”
Last month, Dr Liz Cameron, the Chief Executive of the Scottish Chambers of Commerce said assistance with VAT would make a big difference for firms. She said: “The UK has one of the highest rates of VAT in Europe, which is a significant drag on our competitiveness on the world stage. Cutting VAT would reduce this drag, alleviate the cost burden facing firms and allow those same firms to keep their prices more affordable for the public.”
Emma McClarkin, CEO of the SBPA, told The Herald the introduction of a lower VAT rate for pubs would provide “a tremendous boost to the industry, as well as for pub-goers.“
She said support from the Chancellor was "crucial to help stem the flow of closures experienced over the last year," particularly in light of the Scottish Government's unwillingness to copy the business rates support afforded to pubs in England.
READ MORE: Douglas Ross warns Chancellor against Budget Windfall Tax plan
A UK Government spokesperson said: “We have taken important steps to support hospitality firms in Scotland and will continue to stand firmly behind them. This includes extending the fuel duty cut, energy bills protection, and freezing alcohol duty at recent fiscal events.
“This is on top of a record £41 billion settlement for the Scottish Government.”
Meanwhile, Downing Street has denied suggestions Rishi Sunak viewed the Chancellor as timid and lacking imagination.
The accusation came after the Treasury released official pictures of Mr Sunak studying the Chancellor’s laptop.
The Prime Minister’s official spokesman said: “The Chancellor is working very closely with the Prime Minister to deliver our plan for the economy and obviously the Chancellor will be setting out further measures in line with that on Wednesday at the Budget.”
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